Construction Lumbers Back To Life

Posted on Feb 1, 2011 :: Industries
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Posted by , Insight on Business Staff Writer

It has been a tough two or three years for the economy and many industries have suffered as a result. That is certainly true in the construction industry, but many local builders – despite some losses – have learned how to use the economic downturn to their advantage. As a result, they have survived throughout these lean years, and are now starting to come back from where they were during strong times. We asked leaders at five construction companies in Northeast Wisconsin to share their thoughts on how they’re doing today. What follows are their remarks, in their words.

Bayland Buildings – relationships are paramount

Deb Barlament, vice president of operations: 2010 was better than 2009. We definitely did better in sales. We see the economy continue to make a slow but steady increase and, obviously, we’re enjoying that increase. We’re not back to where we were three years ago, but we anticipate that will happen. We grew about 30 to 35 percent between 2009 and 2010, so we’re getting there.

We have some great projects coming up this year. We’ve got a fairly large grocery store in Shawano that we’re working on. We just completed our second Gold’s Gym. We are doing a large addition for Menasha Packaging. We also see the agriculture part of our business increasing. Even though milk prices have stayed on the low side, we still see the dairy producers continuing to want to add on or build new. So that’s been a real plus for us, as well.

One positive thing that has happened is that as a result of the economy we’ve learned how to work leaner. We know there’s a certain number of things we need to do to make our customers happy and we work very hard to do that. We also recognize that it costs less to keep a customer than it does to get a new one, so we work hard in that area, too. Our relationships with our customers are paramount; they are the most important thing for us. So as the new year unfolds, we plan on continuing to increase our business and work hand-in-hand with our customers.

Jim Reif Builders – Diversify and survive

Jim Reif, owner: 2010 was a fairly decent year for us. Revenues were up 50 percent over 2009. There seems to be a little more confidence out there and we were fortunate to land a couple of really nice homes, though we did five homes altogether during the year. We also did a lot of renovation work last year, which probably came as a result of our name getting out there more as being a company that does additions and renovations. So that probably prompted more calls. We are still down about 25 percent from our strongest year just before the economy turned.

Our diversity helps us remain successful – being able to not just build new homes, but also do small or large renovations, bathroom renovations, kitchen renovations; we did a couple garages for some customers. Diversity is the key for us.

In 2011, I suspect we’ll stay around the revenue we had in 2010. We don’t have anything specific lined up, but again, we’re doing a lot of different things.

We’re working with several people on lots of prospects: some in-house designing; some design-build projects for some people. And we’re really just looking forward to some of those projects moving forward.

Ganther Construction – Senior Living Niche

Tim Rinn, director of development: Business has been good, despite the economy. We’ve been growing each year, probably about 5 to 10 percent a year, and in the last three years we’ve maybe grown by about 20 percent. But we’re a construction management firm and an architect. We’re not a general contractor. And we’re very niched and targeted. Plus, we work nationally so things that affect others in our area don’t necessarily affect us.

Our number one market is senior living and senior care – hospice, Alzheimer’s, Dementia, assisted living, independent housing for seniors, that’s our thing. The senior care market is evolving and changing, but if you look at the demographics, this year is when the baby boomers hit 65 . That’s a huge population around the country that is really unserved in terms of senior care and senior living. There’s a huge need and there are projects all over the country. We really focus on the needs and desires of seniors and how they actually live and what they need. We’re working right now on a senior living facility in Morton Grove, Ill., estimated at about $10 to $12 million.

Another thing we do a lot of is adaptive reuse or repurposing facilities for other uses. We’re also doing a lot of redevelopment projects. We just got our funding for the Watermark project in downtown Green Bay. The closing date on that is mid-January so we’ll be breaking ground after that, even though we’re already there prepping the site. Another industry we’re really getting a lot of work in is the alternative energy-biomass industry. We’re working on plants in different states – Minnesota for one.

We’re in an age of specialties today. People are seeking out the best firms to work on projects. And our economy gives them that ability. But being a construction manager, we can go to any market anywhere in the country and manage a project, manage that client relationship, and get the best contractors in the market on every project – and usually at the lowest cost.

Miron Construction: Success in Partnerships

Corey Brumbaugh, vice president of business development: 2010 went well for us. We actually finished up with a higher backlog than we had done the previous year, which we felt very positive about, comparatively speaking, to others in the construction industry. We also delivered more with less than we have in past years, mainly because resources were strained. But customers are looking for more innovation, more value, because their margins and revenues are strained as well.

One thing we found this past year is customers are looking more for true partners, and it not only centered just on construction. Our customers were also asking us to analyze other aspects of their business, whether it be marketing, or how they can gain more market share, or how they can create more customers attachment for themselves. They were basically asking us to be partners with them and to identify how we can help them improve their business profits as well.

When you become true partners with somebody, then it’s no longer just about a building you’re putting up for someone. It’s about a total relationship and that creates customer attachment, something we can continue to build on.

Our revenue last year increased between 5 and 10 percent over 2009. So we ended up on a positive note with growth, even though we would consider 2010 to be a tougher economy than that of 2009. We’re still down in the 20 to 30 percent range compared with ’05, ’06 or ’07, but we saw that same kind of drop with construction companies across the nation.

The outlook for 2011, and even 2012, is positive. Some people who had put projects on hold are now putting them back in the pipeline; some are even starting the design process. We see some softening of the markets and an ability to get financing for certain projects. There are numerous health care organizations that continue to invest and that are either building right now or have nice projects coming down the road. The industrial and manufacturing markets also continue to invest and build. So we see nice opportunities in the coming year.

Keller Inc. expanding into new markets

Wayne Stellmacher, president and chief executive officer: Our business in 2010 was basically the same as 2009, which was down about 25 percent from our normal years of ’05, ’06 and ’07. The lower number this year was definitely due to the economy, but this year there at least was a lot more conversation about building, whereas in ’09 people were just really clammed up and afraid. They were dealing with their layoffs and their downsizing. In 2010, we saw things get back to normal a little more. People didn’t pull the trigger as much as we would have liked, but we certainly talked to a lot more people about their plans.

We’re excited and optimistic about 2011 and beyond. We think it’s going to be a gradual improvement. We’re starting to see a rebound in manufacturing. Food production is strong. The professional medical field – like dental clinics and medical clinics – is strong. So what we’re seeing is even if the economy is down, service industries continue to keep doing well.

We’d be extremely pleased to get back to our ’05 and ’06 numbers this coming year, but realistically it will probably take all of 2011, and probably 2012 as well, for us to reach that level again.

To survive these last few years we’ve tried to open up some new markets, some new areas of coverage and diversify and expand a little more in some areas where perhaps we did not do work in the past. We’re starting to do some government work, as well as some homebuilding work for our clients. Those are new markets that we have never touched before. We’re also real excited about a major defense contract up in Marinette. Marinette Marine is expanding and we’re doing some work for them; and we also have a huge federal project that was moved back from a November approval to the end of January. So we’ll be starting those, and both of those projects could equal half of our volume for the year.